At a recent infrastructure funding and financing conference, Minister of Infrastructure Chris Bishop set out his plan for bridging the infrastructure gap (excuse the pun).
Alongside the soon to be implemented fast-track national project regime, the Minister is prioritising long-term infrastructure planning and financing.
Given the New Zealand economy is in need of some serious defibrillation, infrastructure projects are the obvious economic stimulant. In his speech, the Minister set out five steps he views as key to “closing the infrastructure deficit”.
- Better maintenance of existing assets.
- Establish a pipeline of infrastructure projects to attract capital and talent.
- Streamline processes and regulations to accelerate infrastructure delivery, including Resource Management Act reforms.
- Enhance efficiency and reduce costs in infrastructure projects.
- Explore innovative funding mechanisms to ensure sustainable investment in infrastructure.
These encapsulate some of the issues that exist within New Zealand development and infrastructure provision. We haven’t maintained assets, we haven’t planned new projects, regulation has become prohibitive, and we need to address funding urgently. These steps are essentially a list of fairly obvious, low-hanging fruit ideas.
How then does the Minister propose to execute these steps? Firstly, he identifies a list of priorities:
- Develop a 30-year National Infrastructure Plan, which includes a pipeline of projects, assessment of priorities, and infrastructure needs analysis.
- Establish a National Infrastructure Agency by 2025 to improve procurement and delivery.
- Modernise and investigate infrastructure funding and financing policies to leverage private investment and enhance asset management. The current Coalition government is receptive to private sector involvement in infrastructure investment.
Again, these priorities appear to be relatively pragmatic and obvious. Planning and funding are the focal points in the execution. Caution should also be taken in establishing another Government agency. The last thing we need is to create more bureaucracy to hamper project delivery.
The key mechanism for achieving these objectives is the 30-year National Infrastructure Plan. Running parallel to this would be the proposed fast-track, one-stop-shop project consenting regime, which addresses streamlining processes and regulation.
In terms of funding, nothing is particularly innovative or novel. There are plenty of examples of countries using well-established private funding models to fund infrastructure. Roads in Europe are maintained and upgraded through toll funding. Australia has built trains through a public-private partnership (PPP) model. These may be novel to New Zealand, but they are proven internationally.
Improving our ports and transport networks is also vital to an efficient economy and well-functioning communities. Having transport operators, logistics companies and tradespeople all sitting in hours-long traffic jams on the Southern Motorway is killing economic efficiency. Small businesses, and therefore consumers, all suffer as a result.
As controversial as it may appear, a multi-modal transport approach is desperately needed. The inability to get from Hamilton to Auckland by any other means than the Southern Motorway is a blight on our supposed modern, first-world status. North Waikato is one of the fastest-growing areas in New Zealand, and we have an opportunity to support those communities with more efficient transport networks.
What the development sector wants to see is central and local government supporting the provision of housing and communities by investing. Instead, we have cost on cost. Development contributions continue to escalate, while developers are still funding some trunk infrastructure themselves. It is clear that the local government funding model isn’t sufficient to support infrastructure alone.
Let us hope this plan is the road to better infrastructure, economic efficiency, and well-functioning communities.
Tom Anderson and Sara Seyedsalehi